TOC - Goldratt, Eliyahu

Theory of Constraints

Constraint Management:

Summary of TOC - Goldratt. Abstract

Eliyahu Goldratt

Did you read "The Goal?" Remember Herbie? The Theory of Constraints of Eliyahu Goldratt
is a model that is the
practical result of Eli Goldratt's work on "how to think". In
a number of books, Goldratt described certain thinking processes and
their applications.

Central to the concept of TOC is the acknowledgement of cause and
effect. The Thinking Processes of TOC give us a series of steps which
combine cause-effect and our experience and intuition to gain knowledge.
TOC is a verifiable philosophy. By knowing how to think, we can better
understand the world around us; by better understanding we can improve.

Organizations are a complex web of
people, equipment, methods, materials and measures. This detail
complexity is bad enough, then add to it the dynamic complexity of
changing customers, suppliers, workforce, regulations, etc. and you have
a picture of the challenge faced by today’s management team.

Traditionally, management has divided
the organization into smaller, more manageable pieces. The objective is
to maximize the performance of each part. After all, global improvement
is the sum of the local improvements. Right?

Wrong! TOC claims that a change to most
of the variables in an organization will have only a small impact on the
global performance – on the bottom line. There are very few variables,
perhaps only one, where a significant improvement in local performance
causes a significant improvement in global performance. Such a variable
is called a constraint. You can compare it to the weakest link in a
chain.

The essence of the TOC approach is that
If you want more of your goal, you must:

A. Identify your constraint

B. Focus on the constraint (A
company must first know its goal and the necessary conditions for
achievement. Then it must identify the constraint(s), that
is/are limiting the level of achievement of that goal.

C. Follow it through (The
Process Of On Going Improvement:

#1. Identify the constraint

#2. Exploit it

#3. Subordinate all other operations to the necessity to exploit the
constraint

#4. If after #2 and #3 more capacity is needed to meet market demand,
Elevate the constraint.

#5. Go back to #1, but don’t let inertia become the system’s constraint)

Most people know the Theory of
Constraints as an approach for

- Manufacturing environments (Goldratt's
first book: "The Goal" is set in that environment: